Why is the iphone 5 more expensive here in Australia?

Outright purchase of the iphone 5 64gb in Australia costs $999 whereas the US sells it for $399. Why exactly is this a huge difference considering that our currency is fairly close?

The $399 is the subsidized price when you get the phone along with a 2 year contract. So the cost of the 64GB should be lower if you get a 2 year plan when you get the phone. I don't know how the phone plan in Australia is like but it's this way in the US. If you don't get the phone at a subsidized price, you can get it at full price which is $849 (I think) for the 64GB in the US. If your price is higher over there, maybe it's the air shipping or something else because your country is importing the phone (that's what I think).

Australias iPhones are unlocked and bought outright from the Apple store. The US apple store sells them locked and under contract

Its $399 on a contract. Outright, it would be similar to the Australian cost. Luckily for Australians, the upfront fee is very small, even for the iPhone 5, and wouldn't be in excess of $100.